Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows: Inventory Purchases Sales May 1 1 ,300 units at $32 May 10 650 units at $34 May 12 910 units May 20 585 units at $36 May 14 780 units May 31 390 units Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column. Schedule of Cost of Merchandise Sold FIFO Method Prepaid Cell Phones Purchases Quantity Date Purchases Unit Cost Purchases Total Cost of Merchandise Sold Quantity Cost of Merchandise Sold Unit Cost Cost of Merchandise Sold Total Cost Inventory Inventory Unit Cost Inventory Total Cost May 1 May 10 May 1,00011 000 0 May 14 May Balance Balances 31 Entries and Perpetual Inventory Account (FIFO) EXHIBIT 3 Item 127B Jan. 4 Accounts Receivable Sales 4 Cost of Merchandise Sold Merchandise Inventory 21,000 21,000 14,000 14,000 Purchases Unit Quantity Cost Cost of Merchandise Sold Unit Total Quantity Cost Cost Total Cost 11,200 Date 10 Merchandise Inventory Accounts Payable 11,200 Jan. 1 Inventory Unit Quantity Cost 1,000 20.00 300 20.00 20.00 500 22.40 Total Cost 20,000 6,000 6,000 11,200 700 20.00 14,000 la 500 22.40 11,200 300 22 Accounts Receivable Sales 22 Cost of Merchandise Sold Merchandise Inventory 10,800 10,800 7,344 7,344 300 60 240 20.00 22.40 22.40 6,000 1,344 5,376 440 200 200 600 22.40 22.40 22.40 23.30 7,200 28 Accounts Receivable Sales 28 Cost of Merchandise Sold Merchandise Inventory 600 23.30 13,980 9,856 4,480 4,480 13,980 18,460 7,200 5,376 31 Balances Balance 26,720 5,376 13,980 30 Merchandise Inventory Accounts Payable 13,980 Cost of merchandise sold January 31 inventory